French GDP should grow by 0.6% in 2023, 1.2% in 2024: Banque de France

“We should therefore effectively escape the recession in France as well as in the euro area as a whole,” Beau told the Nomura 39th Central Bankers Seminar held at Kyoto yesterday.

Trade shock should subside this year as pressures on import prices fade with the easing of energy prices, and is expected to represent an additional economic cost of around 0.5 per cent of the GDP in France compared to 2021 when conditions were more normal, Beau said. It should then remain limited in 2024 and 2025, he said.

Supply-side bottlenecks in terms of supply and recruitment are easing, but they should continue to constrain the economic activity economy somewhat, he said.

The Banque de France believes that the current sharp acceleration in inflation is fundamentally due not to excess liquidity, but to the bottlenecks stemming from the faster-than-expected rebound in activity in the aftermath of the pandemic, as well as to the sharp rise in energy and food prices, which was largely exacerbated by the war in Ukraine, he said.

The COVID turmoil and the immediate impact of the war in Ukraine on financial stability have been well absorbed in Europe and in France, he said.

In 2023, the financial sector globally is facing renewed headwinds with heightened geopolitical risks, high inflation, the phasing-out of accommodative monetary policy, high debt levels in the private and public sector and a deteriorated economic outlook.

In addition financial markets are going through a new period of uncertainty and volatility, triggered by idiosyncratic events in the US and Swiss banking systems, he added.

Fibre2Fashion News Desk (DS)